Google Checkout Solution
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I have only tested this for about 5 minutes but it worked every time. :) Give this a shot to incorporate this mod into your Google Checkout.

In gcheckout.php (on or around line 719 there is a SQL query, I changed mine to:

$tax_result = $db->Execute("SELECT
zen_tax_rates_local.local_tax_id,
zen_tax_rates_local.zone_id,
zen_tax_rates_local.local_fieldmatch,
zen_tax_rates_local.local_datamatch,
zen_tax_rates_local.local_tax_rate,
zen_tax_rates_local.local_tax_label,
zen_tax_rates_local.local_tax_shipping,
zen_tax_rates_local.local_tax_class_id
FROM
zen_tax_rates_local
WHERE
zen_tax_rates_local.local_datamatch = " . SHIPPING_ORIGIN_ZIP . "");

on or around line 743 you should see
$rate = ((double)($tax_result->fields['tax_rate']))/100.0;
change that to
$rate = ((double)($tax_result->fields['local_tax_rate']))/100.0;

I also got rid of a few lines. You won't be able to copy/paste my changes but this will definitely get you 80% there. I have pasted the entire foreach below. Modify as necessary. I'm doing zip code lookups. It will only work with zip codes.

Code:
foreach($tax_array as $tax_table)  {

    
   $tax_result =  $db->Execute("SELECT
zen_tax_rates_local.local_tax_id,
zen_tax_rates_local.zone_id,
zen_tax_rates_local.local_fieldmatch,
zen_tax_rates_local.local_datamatch,
zen_tax_rates_local.local_tax_rate,
zen_tax_rates_local.local_tax_label,
zen_tax_rates_local.local_tax_shipping,
zen_tax_rates_local.local_tax_class_id
FROM
zen_tax_rates_local
WHERE
zen_tax_rates_local.local_datamatch = " . SHIPPING_ORIGIN_ZIP . "");
                                          
  $num_rows = $tax_result->RecordCount();
  $tax_rule = array();


  $GAtaxTable = new GoogleAlternateTaxTable((!empty($tax_name_array[$i])?$tax_name_array[$i]:'none'), 'false');

  for($j=0; $j<$num_rows; $j++) {
    $tax_result->MoveNext();


    $rate = ((double)($tax_result->fields['local_tax_rate']))/100.0;
    $GAtaxRule = new GoogleAlternateTaxRule($rate);
	$GAtaxRule->SetStateAreas("CA");
		
    			
    $GAtaxTable->AddAlternateTaxRules($GAtaxRule);
  }
  $i++;
  $Gcart->AddAlternateTaxTables($GAtaxTable);  
}